Coca-Cola Co's Dividend Analysis
An In-Depth Look at Coca-Cola Co's Upcoming Dividend Payment and Its Sustainability
Coca-Cola Co (NYSE:KO) recently announced a dividend of $0.49 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Coca-Cola Co's dividend performance and assess its sustainability.
What Does Coca-Cola Co Do?
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Founded in 1886, Atlanta-headquartered Coca-Cola is the world's largest nonalcoholic beverage company, with a strong portfolio of 200 brands covering key categories including carbonated soft drinks, water, sports, energy, juice, and coffee. Together with bottlers and distribution partners, the company sells finished beverage products bearing Coca-Cola and licensed brands through retailers and food-service locations in more than 200 countries and regions globally. Coca-Cola generates around two thirds of its total revenues overseas, with a significant portion from emerging economies in Latin America and Asia-Pacific.
A Glimpse at Coca-Cola Co's Dividend History
Coca-Cola Co has maintained a consistent dividend payment record since 1963. Dividends are currently distributed on a quarterly basis.
Coca-Cola Co has increased its dividend each year since 1963. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 61 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Coca-Cola Co's Dividend Yield and Growth
As of today, Coca-Cola Co currently has a 12-month trailing dividend yield of 3.02% and a 12-month forward dividend yield of 3.19%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Coca-Cola Co's annual dividend growth rate was 3.90%. Extended to a five-year horizon, this rate decreased to 3.30% per year. And over the past decade, Coca-Cola Co's annual dividends per share growth rate stands at 4.70%.
Based on Coca-Cola Co's dividend yield and five-year growth rate, the 5-year yield on cost of Coca-Cola Co stock as of today is approximately 3.55%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Coca-Cola Co's dividend payout ratio is 0.66.
Coca-Cola Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Coca-Cola Co's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Coca-Cola Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Coca-Cola Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Coca-Cola Co's revenue has increased by approximately 11.40% per year on average, a rate that outperforms approximately 71.57% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Coca-Cola Co's earnings increased by approximately 11.80% per year on average, a rate that outperforms approximately 52.69% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.80%, which outperforms approximately 60.61% of global competitors.
Next Steps
Considering Coca-Cola Co's robust dividend history, consistent growth in dividend payments, a reasonable payout ratio, and strong profitability and growth metrics, the company's dividend appears to be sustainable. These factors make Coca-Cola Co an attractive option for value investors seeking stable dividend income. However, as with any investment, it's crucial to continue monitoring these metrics to ensure that the company maintains its dividend-paying capability in the face of economic changes and industry dynamics.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
